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Sunday, November 24, 2013

Twelve Reasons of poverty in Pakistan

At independence in 1947, Pakistan was a poor country. But it was richer than China, India and many other currently `emerging` economies. Today, Pakistan`s per capita is $1000 while China`s is $5000 and South Korea`s $15,000. One per cent of Pakistan`s population controls over half its wealth; the other 99pc struggles to survive on less than $500 annually.

At this time, when hope has been revived that new leaders and policies may retrieve Pakistan from the poverty trap, it is relevant to recall the dozen reasons why our people are poorer today than at the country`s creation.

First, population growth.

At Pakistan`s birth, the then West Pakistan had around 50 million people. Today, we number 200 million. The oooulationcontinues to grow at around 2.5pc. There is progressively less for more. The explosion can be moderated through incentives and disincentives.

Second, inflation.

The state spends more than it earns. It orints money tomake up tl1e deficits, steadily devaluing the earnings and savings of the people.

Thus, rupee parity against the dollar has declined by around 5pc on average each year. Until 1970, the rupee was 4:1 against the dollar. Today it is 100:1. If the dollar`s own deflation is taken into account, a Pakistani must earn over 50 times as many rupees as he did in 1947 to maintain the same living standard.

Third, unemployment.

In 1947, 80pc of people lived off the land in rural areas. Today, with the pressures of population, urbanisation and the failure of industrialisation, effective unemployment and under-employment afflicts almost half of Pakistan`s working age population. This can only be redressed by rapid industrialisation, investment and skill creation.

Fourth, ignorance.

In any event, almost 25pc of our people are presently unemployable in anything except physical labour due to the progressive collapse of Pakistan`s education system.

Literacy is defined as being able to read and write one`s name. By any objective standard, Pakistan`s real literacy rate is around 50pc. Massive and well directed investment is needed to promote universal and quality education.

Fifth, inequality.

Pakistanis were bornin a state of feudal inequality in the rural regions. Feudalism has since spread to business, industry and bureaucracy. The gap between rich and poor has grown exponentially. Pakistan`s elite the 1pc lives high off the hog, while the vast majority slides steadily down towards the poverty precipice.

Sixth, wars.

Locked since inception in mutual hostility with its larger eastern neighbour, Pakistan`s financial and intellectual capital has been heavily deployed to the defence of its borders.

Three wars with India; a never-ending arms race, and involvement in America`s wars in Afghanistan, has drained Pakistan`s limited resources and attention away from economic and social development. Pakistan needs to find strategic and diplomatic ways to lower the burden of deterring India. Its nuclear weapons capability should help achieve this.

Seventh, extremism.

Since 1977, Pakistan has become a virtual captive tothe forces of religious and associated extremism. Their street power and misguided use by some Pakistani leaders and agencies to promote external and internal objectives has transformed Pakistan`s environment of tolerance into one of fanaticism and violence. They cannot be allowed to hold the country`s progress hostage.

Eighth, insecurity.

The combination of organised crime, religious bigotry, violent extremism and political opportunism has resulted in the current state of insecurity in many cities and regions.

The global perception of Pakistan`s security environment is even worse than the reality. No significant foreign or domestic investment or development can take place until the security challenge is addressed. Confusion, vacillation and fear are the government`s worst enemies.

Ninth, emigration and immigration.

The composition of Pakistan`s population has changed significantly since independence. Many among the educated and skilled have left. These include members of religious minorities and those who were transformed into minorities. On the other hand, Pakistan has been inundated by millions of tribal Afghans. Despite pockets of brilliance, as an entity, Pakistan today is intellectu-ally, culturally and financially a more backward place than 60 years ago.

Tenth, disinvestment.

The country is poor because the state is poor. As the country spends more than its revenues so do the people. Savings are not smart if these are going to be eroded by inflation.

Without national or personal savings, investment in infrastructure, education, industry, small and medium enterprises has not been forthcoming from the public or private sector. Pakistan has had to depend on external assistance and loans to fund development, which remains inadequate to meet the needs of its population.

Eleventh, globalisation.

Unfortunately, Pakistan was persuaded by the Washington Consensus that trade and financial liberalisation was good for all.

It unilaterally dismantled its protections.

But it cannot produce most goods competitively. This, combined with the culture of consumerism, has led to Pakistan becoming an import destination ratherthan an export base. While the persistent trade deficits are partially offset by the remittances from poorer Pakistani emigrants, most of our governments have been obliged to carry the begging bowl to our rich friends, at times even tomeet our vital defence needs.

Twelfth, bad governance.

Most of the 11 previous shortcomings originate from bad governance. With some outstanding exceptions, Pakistan has a record of bad or no policies and even worse of execution. This is largely due to the decline and eventual collapse of Pakistan`s bureaucracy and the accompanying erosion of rules and due process Personalised decision-making is now the norm; senior bureaucrats act more as personal rather civil servants. From an occasional virus, corruption has become an endemic disease.

Without professional and competent people to formulate and execute sound policies in various areas, Pakistan will be unable to overcome its imposing array of challenges.

The challenge posed by the poverty dozen cannot be addressed piecemeal. It requires a comprehensive policy designed to transform Pakistan into a modern, peaceful and prosperous country. Patriotic Pakistanis should demand such a policy and contribute to its formulation and implementation. They cannot give in to the dark side.  The writer is a former Pakistan ambassador to the UN.